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Under What Circumstances Might a Binding Minimum Wage Be Effective

Question 105

Multiple Choice

Under what circumstances might a binding minimum wage be effective in easing the burden on the poor?


A) only if the demand for unskilled labour is relatively elastic
B) only if the demand for unskilled labour is relatively inelastic
C) only if the minimum is substantially above the equilibrium wage rate
D) only if it doesn't increase the firm's marginal cost

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